Fidelity Investments of Boston is promoting a cautious approach in relation to its offering of market-linked certificates of deposit (CDs) to financial advisers and their retail investors. The firm said that its monthly structured products offerings must meet certain criteria before the asset management firm will put its distribution muscle behind them.

According to a Fidelity spokesperson, the firm only offers between three and six structured CDs at one time to retail investors, who can see the terms of the products on its website. Fidelity has a strict rules-based set of criteria including that the market-linked CD is principal-protected (subject to the credit risk of the issuer) and is insured by the FDIC, and that it is issued by a bank possessing a minimum credit rating of A. In addition, any market-linked CD structure offered by Fidelity must offer a simple point-to-point performance assessment.

“Fidelity does not ‘tweak’ the structure – we offer what the market has and [which] fits our criteria,” the spokesman added.

This month, Fidelity is offering a trio of structured CDs, two linked to the performance of different proprietary indices from JPMorgan (JPMorgan Optimax Market Neutral Index and JPMorgan Efficiente 5 Index of ETFs) and a Barclays-issued CD linked to the performance of the Eurostoxx50 Index with an upside return cap of 70%.

The seven-year Barclays structured CD was set to strike last Friday, while the two JPMorgan CDs will strike price this week. The JPMorgan products have tenors of four years and five years, respectively.

In November last year Fidelity announced it would expand its range of investment products and services offered to its 5,000 investment advisory firm clients through its Fidelity Institutional division’s alternative investments platform.

Fidelity already provides clearing, custody and a bevy of investments to this network of advisers. But while certain alternative investment products were being added, structured products were not among the menu choices.

Currently, structured products are offered to retail clients of broker-dealers as well as registered investment advisers through the firm’s Fidelity Capital Markets unit.

At 31 December 2013, Fidelity had $4.6tr in assets under administration which included $1.9tr in managed assets.

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